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Before jumping to find out the best in Gold ETF category, one should pay attention to the various parameters of Gold ETFs. One should analyse carefully the parameters. Although all Gold ETFs are from leading mutual funds, it may vary in some parameters. Following are the points
1) Low tracking error and Low expense ratio - Gold ETFs NAV should follow the market price of physical Gold. How much it is nearer to the price of physical gold is the foremost thing. If an Gold ETFs' NAV is very much nearer to the price of physical Gold, then it means that, there are less expenses associated with that particular Gold ETF. Or in other words, the expense ratio of the Gold ETF is less. The fund house succeeded in keeping the expenses minimum.
2) Liquidity - Volume traded in the exchanges also play a part in the selection of Gold ETF. Higher the volume traded daily in the stock exchanges, lesser the difference between buy and sell order. If the volume is low, then the investor has to increase or decrease the order price, in order to execute his order. When the investor is in need for money urgently, and if in the exchanges, there are less volume, then he has to reduce the sell price. So he will be at a loss. When Asset under management is high for a Gold ETF, then the impact cost associated with that Gold ETF will also be less.
3) Flexibility in Investment - Go for the Gold ETF, which is giving you the flexibility in SIP's or minimum investment. Most convenient and affordable minimum investment.
4) Higher NAV along with higher volume also play a part in the selection of Best gold ETF in India.
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